Plains weighs idling oil pipeline due to new competition -report

NEW YORK, May 26 (Reuters) - Plains All American LP is considering idling its 1.2 million barrel-per-day Capline pipeline, the nation’s largest crude pipeline, as competing lines begin service, according to a bank report on the company’s investor presentation this week.

The Louisiana-to-Illinois Capline, once a major artery to deliver imports and Gulf of Mexico crude to U.S. Midwest refiners, has suffered a sharp decline in volumes in recent years as the U.S. shale boom pushed inland crude to the East Coast and Gulf Coast.

Houston-based energy investment bank Tudor Pickering Holt & Co wrote in a note that Plains disclosed during the investor presentation on May 24 that Capline would be “idled as redundant pipeline capacity” from the U.S. storage hub of Cushing, Oklahoma, comes online.

In an investor slide presentation posted on its website the same day, Plains depicted the Capline as being “shut down” by 2021 as rising volumes of oil flow to the U.S. Gulf on other pipelines. The slide didn’t further detail its plans.

Capline last year moved only about 360,000 bpd, less than a third of total capacity, Tudor Pickering said.

“We expect that new supply pipelines could impact Capline volumes, however, any decision regarding Capline operations will be made by its owners,” a Plains spokesman said in an email late Thursday, responding to a query on potential plans to shut down the pipeline.

Plains is the majority owner of the pipeline, and Marathon Petroleum Corp and BP PLC have minority stakes.

BP and Marathon did not respond to requests for comment on any possible plans to idle or shut down the pipeline. (Reporting by Catherine Ngai Editing by W Simon)